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My first go to guy on all things DMCA, copyright, and digital law and policy is the EFF’s Fred von Lohmann. I started an email interview with him prior to the GooTube deal, and it only seems more salient now. Read on for Fred’s insights:

Is YouTube on safe legal ground, given all the recent press and buzz around copyright?

Well, virtually no one in the Internet industry is on “safe” legal ground. As any copyright lawyer will tell you, the legal standards governing all Internet businesses are still more uncertain than we’d like. Just witness all the litigation that companies like Google and eBay are involved with.

Of course, when most people think about potential legal liability for YouTube, they are thinking about potential copyright risks. And although nothing in the Internet legal realm is entirely certain, YouTube looks to be on relatively firm legal ground. Unlike some more aggressive companies (like the old Napster), YouTube has the benefit of a set of special “safe harbors” created for online service providers as part of the Digital Millennium Copyright Act (DMCA). If your activities fall within the safe harbors, as defined in Section 512 of the Copyright Act, you can’t be liable for money damages for copyright infringement based on those activities. There is a different safe harbor for each of the following activities: providing network access (e.g., your ISP), caching, storing material on behalf of uses (e.g., web hosting), and providing information location tools (e.g., search engines and linking).

One of those DMCA safe harbors was designed to protect providers of hosting services. When it was passed, Congress had big web hosting services in mind, but the rules work just as well for video hosting services (like YouTube), blog hosting (like Blogger), and music lockering (like MP3Tunes). There are a number of requirements that a hosting provider must meet, but the most important one is the implementation of a “notice-and-takedown” policy. YouTube has such a policy in place, allowing copyright owners to notify it of infringing videos and taking them down promptly upon receiving such a notice. Other requirements include implementing a policy of terminating “repeat infringers,” which YouTube also has, and registering a “copyright agent” with the Copyright Office, which YouTube has done.

The outer boundaries of the DMCA safe harbors are still being hammered out in court (porn vendor Perfect 10 has been leading the charge on behalf of copyright owners on this legal front). And it’s not just YouTube that is interested in these legal fights — because any legal precedents undermining the safe harbor would put Google, Yahoo, AOL, MySpace, eBay and others at risk–the biggest Internet players have a stake in the outcome.

But so far, so good for YouTube. It looks like YouTube is working hard to keep its boat in sheltered copyright waters.

Given what you just told me, why, do you think, the major media companies – potential acquirers of YouTube – are still wary of the company, as reported in many quarters (Ireported as much on my blog)? Is it simply: “I don’t want to be the test case for the DMCA?”

YouTube, like so many Internet pioneers before it, is in the disruptive innovation business, and thus sure to upset many incumbent players. So, despite the fact that YouTube is on reasonably firm legal footing, many media company suitors are probably going to be cautious here. They’ll be wringing their hands, worried that maybe YouTube has gone “too far,” will end up the legal “javelin catcher” out front, and the market will belong to a second-comer (see, e.g., ReplayTV and TiVo). And many incumbent media players are not eager to alienate their comrades (sometimes known as “competitors,” but more frequently known as “deal partners” ) over some new upstart with an uncertain future. Remember what happened to Bertelsman when it invested in Napster?

In this regard, YouTube is nothing new — disruptive innovators are never popular with the popular kids. Just think back on Sony in the days of the Betamax, or Diamond with its category-creating Rio MP3 player. Or, for that matter, Google today, attacked from all sides for disrupting comfy old markets (books, advertising, etc).

Let’s talk about some of that disruption. Where do you come down on the Google books issue?

I’m a big supporter of Google’s Library Project — I predict its legacy will outlive that of Google’s search products. I haven’t bothered writing out my views because they have already been more eloquently put by others.

On the general topic, I couldn’t have put it better than Columbia Law School Professor Tim Wu:

Now that we know who bought YouTube… do you think Google is going to get sued in any case?

YouTube has already been sued (by LA New Service), so Google is essentially buying that lawsuit. But I don’t think that’s a problem — frankly, precedent set against YouTube will likely exert strong influence over the entire video hosting industry. So, in essence, Google is just getting more direct control over a lawsuit that is important for its existing and future business. And when it comes to lawsuits, Google has top-drawer talent (both in-house and in outside law firms), strategic vision, and a stellar track record. Google’s executives (like AOL’s and Yahoo’s before them) understand that shaping the legal precedents is a critical part of their business.

And it’s important to consider who are the people suing YouTube. I’ve thought for some time that the first lawsuits against YouTube (and other video hosting services) will be from small copyright owners (like LA News Service), not from major media companies. That’s good news for YouTube (and Google). Small timers tend to lack the resources to bring top-drawer legal talent to bear in these fights. As a result, they often lose, creating useful precedents for the Google’s of the world. In fact, Google has already been successful in securing good precedents against unsophisticated opponents who thought that they could squeeze a quick settlement out of Google (Field v. Google, Parker v. Google). What the small-timers don’t appreciate is that Google would much rather spend money on setting a good precedent than on settling.

So I think the YouTube acquisition may well represent a legal opportunity for Google (and the Internet industry generally), rather than a vulnerability. After all, litigation to define the copyright rules for new online services is inevitable — better to choose your battles and plan for them, rather than fleeing the fight and letting some other company create bad precedents that will haunt you later.

Since you have a law person on your blog, may I ask some related questions. What happens to the requirement of not profiting from the infringing content to invoke the safe harbor principle of DMCA. Like web-hosting fee seems to be okay, as congress might have think of, similarly advertising revenue might be okay too? One way to think may be that these web-hosting fee and ad revenue are for providing the hosting services and independent of the legality of content? Also hosting is when you store and pass along the content as is. Does not the change in the format make it more than a hosting service? Though, a solution is to let users do the format conversion using some connected web-service.

I’ve made the following points before, but they continue to be relevant, so I’ll make them again.

First of all, let me say that I agree in principle about the usefulness of things like book search, video search, etc. It is the execution that I am taking issue with.

If everything you say above it true, about the applicability of DMCA safe harbors to the type of service GooTube is providing, then we have just opened a Pandora’s box in which everything becomes completely free, for all people at all times, with no restrictions.

How? Well, it hinges on hosting services. What makes Google so special? Does it just apply to them? No, of course not. Another big player like Yahoo can do it, too. Well, does it just apply to big players? No. Smaller players like Revver or CastTV can do it, too. Is it limited to smaller players? No. Tiny players can do it, too. Like my friend Ted. Or like me. Think of it as a “Kant-ian hosting services categorical imperative”.

So imagine a P2P “hosting” network in which people no longer “download” files from each other, but instead publish “manifests” of which files they are willing to host, and then let people upload those files to one’s personal hosting site. Because the person doing the hosting doesn’t have the resources of a Google or a YouTube, to automatically verify file integrity, he or she then has to transfer that hosted, uploaded file to an iPod or a CD, and manually listen through a couple dozen times, preferrably while in the car or on the subway, to make sure that the file was properly received.

Sure, there are details to be hammered out. In order to qualify for DMCA safe harbor status, each individual has to have a mechanism for the copyright holder to be able to request removal of copyrighted content, and will have to terminate repeat offender uploaders, etc.

But since everyone in the world is now a hosting service, that is hundreds of millions of hosting services, with thousand of songs each, therefore trillions of takedown notices. The RIAA will never keep up. Remember, each one of us is a different hosting service, even if we all use the same P2P protocol. Just like you have to notify YouTube separately from Yahoo Video, so would you have to notify Frank in Michigan separately from Carol in Arizona, even if they had both “hosted” files on each other’s hosting service.

And no problem with repeat offenders, either. A repeat offender is someone who uploads copyrighted content to me more than once. That’s fine. I’ll just let a different person upload their content to me each time. With hundreds of millions of P2P “hosting services”, that shouldn’t be a problem. This is a “per hosting service” requirement, so if I upload one file to Carol in Arizona and another file to Frank in Michigan, I am technically not a repeat offender on either Carol’s or Frank’s hosting service.

I think the very complex copyright issues will easily be resolved in favor of the very simple issues surrounding … revenue sharing. As long as Google can monetize better than the person on their own they’ll not have many lawsuits.

You know, I’m usually gung ho about anything that issues forth from Fred’s mouth, but this statement was downright chilling: “Small timers tend to lack the resources to bring top-drawer legal talent to bear in these fights. As a result, they often lose, creating useful precedents for the Google’s of the world.” Isn’t this the exact same strong-arm tactic the recording industry has been using as of late? To hear von Lohmann condone such behavior by Google so nonchalantly seems kind of out-of-character for him, IMHO. I guess you could argue that those small fry litigants walked right into their own trap and enjoy a brief moment of shadenfreude. Still, it caught me a bit off guard to see that facet of his character exposed. Perhaps all’s fair in love and war, the end justifies the means, etc., etc…

I thought this was a key quote here: “Google’s executives (like AOL’s and Yahoo’s before them) understand that shaping the legal precedents is a critical part of their business.” Great interview! Thanks, John.

Why don’t the Big Time content owners who feel they may have a copyright infringement case against some of these various video hosting services sue one of the smaller, less legally sophisticated video services and establish a precedent, THEN sue GoogTube and beat them over the head with it.

In my previous post in this same column I posited that Google should be wary, not of Big Content companies suing Google, becasue Google is legally savvy, rather google should worry about a Big Content company suing some other Internet Video company that can not defend itself as well as Google.

What could come from something like this kind of suit is UMG suing and winning then establishing some sort of precedent that they might not otherwise have been successful at acheiving in suing Google.

However, having established a precedent in a suit such as this gives them a something to leverage against Google.